Is Owning Your Market A Necessary Goal?
Businesses are often measured by what percentage of the market they own. However, for small businesses (bootstrappers, indies, etc) this is completely unnecessary.
Here is an example:
Say you wanted to build software that helped sushi restaurants track the age of their sashimi grade fish stock (feel free to steal this idea).
You do some back of the napkin math:
- There are 200,000 sushi restaurants in the US
- You want to sell software for $100/month ($1200/year)
- 20% of them should be using this type of software
Bam! This is a 48 million dollar market.
Then you start to think about the competition. Are there any big players? Is there a chance I could capture a large chunk of this market? What kind of resources would I need? How could I sell to them? blah…blah….
In most cases, you talk yourself out of it. You think even if there is a 20 million dollar opportunity it will cost too much or be too risky to try and reach it.
But what if you flipped the equation around….
What if instead you said to yourself, “Self, I want to build a sashimi sushi software business that generates 150,000 a year in revenue”1.
Using the same $1200/year per customer we come can conclude that we need to be able to find 125 customers.
This is very much achievable. At this level, it doesn’t matter if there are large competitors in the market. How do you reach 125 customers? Well, you could just start calling 20 a day? Heck, in the beginning just start visiting the local ones. Order the lunch special, ask to talk to the manager (most are empty at lunch).
Assuming there is an existing market for what you are selling, this dramatically cuts the risk of the project. There are already customers for this type of product. You, hopefully, have a product which does something unique.2
Over the years I have let a lot of ideas for products go because I come across another solution or two that are similar or someone else already owned the market. This was a mistake. I was defining success on too large of a scope. When success is based on your own needs instead of owning the market it opens up a world of opportunity and many more markets.